A law meant to prevent unemployment fraud has been struck down as unconstitutional by the Minnesota Court of Appeals, which said the law is "based on anecdotal evidence of a hypothetical fraud scheme."

The appellate court reversed a lower court's decision and ruled against the Minnesota Department of Employment and Economic Development (DEED), saying that the law, which bars unemployment benefits for personal care assistants (PCAs) who care for family members, was arbitrary and violated the Minnesota Constitution's Equal Protection Clause.

The decision, published Monday morning, effectively prohibits the state's county courts from enforcing the law. DEED has not said whether it will ask the Minnesota Supreme Court to uphold the law, and agency spokesman Blake Chaffee on Monday would only say that DEED is "reviewing the ruling."

The appellate court compared the unemployment benefit law in this case to unconstitutional laws requiring harsher punishment for possession of crack cocaine compared to powdered cocaine and a law cutting public assistance to new residents to deter people from moving to Minnesota to collect welfare.

DEED supported the law to solve a purported fraud scheme in which PCAs who cared for family members would cook their work hours to boost unemployment benefits.

"DEED offered no evidence or legal authority to the Legislature to support this allegation of fraud, nor has it offered any factual support on appeal," the three-judge panel wrote in its opinion.

Existing fraud protections are adequate, the court wrote, but the challenged law "creates an irrebuttable presumption that any immediate-family-member PCA who applies for unemployment is doing so fraudulently."

The Richfield man who brought the case, James Weir, cared for his mother as a PCA from March 2010 until her December 2011 death. DEED said he didn't try to manipulate the system but denied his unemployment claim under the law, which took effect in July 2010.